Celltrion Slips as Big Investors Turn Away

[Asia Economy Reporter Koh Hyung-kwang] The stock price of Celltrion has dropped more than 30% over the past two months. Attention is focused on the background as major market players such as foreign investors and institutional investors have been flooding the market with large sell orders.

According to the Korea Exchange on the 23rd, Celltrion was trading at 235,500 KRW on the KOSPI market as of 11 a.m., down 0.8% from the previous trading day. It has been declining for five consecutive days, showing a sluggish trend with only one day of increase (0.5% on the 16th) out of the last nine trading days. Compared to the stock price of 310,000 KRW on August 24, two months ago, it has slipped by 31.6%. This contrasts with the upward trend it showed since the pandemic low of 140,000 KRW on March 19, steadily rising.

The decline in Celltrion's stock price is largely due to major market players flooding the market with large sell orders. Foreign investors and institutional investors have sold Celltrion shares worth 332 billion KRW and 243 billion KRW respectively over the past two months, accelerating the stock price decline. The total amounts to 580 billion KRW. Although individual investors have net purchased 530 billion KRW to defend the stock price, it was insufficient. Celltrion ranked 4th in foreign net selling and 7th in institutional net selling over the past two months, indicating an abundance of sell orders.

First, negative reports from global investment banks (IBs) have hindered the stock. JP Morgan issued a report on the 9th of last month, stating that Celltrion's future growth potential is limited and gave a 'sell' rating. The target price was set at 190,000 KRW, about 40% lower than the stock price at that time. They cited the slowdown in Celltrion's growth in the biosimilar market and the advanced stage of research and development, arguing that the valuation (stock price relative to earnings) was excessively high. Although Celltrion immediately rebutted the next day, the securities industry believes that this report somewhat contributed to curbing Celltrion's upward momentum.

Skepticism about the merger effect of the so-called 'Celltrion Trio'?Celltrion, Celltrion Healthcare, and Celltrion Pharm?also seems to have had an impact. A financial investment industry official said, "Since research and development, production, distribution, and sales are carried out simultaneously through a single company, cost reduction is expected," but added, "No separate announcement has been made regarding business structure changes such as business unit transfers due to the merger, so it is premature to conclude the effects. Generally, when a company grows larger, spin-offs dividing the business are common in the industry, but Celltrion is different," expressing a cautious stance.

However, the solid performance is seen as positive for future stock prices. Myungseon Lee, a researcher at Shin Young Securities, said, "Celltrion's third-quarter performance is expected due to top-line growth and cost improvements," adding, "The growth in earnings will continue in the fourth quarter with the insurance listing effect of Truxima and despite increased clinical costs for COVID-19 antibody treatments, profitability will also continue to grow through improved production yield."

This content was produced with the assistance of AI translation services.